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Sudan and South Sudan reach deal on oil transit dispute

August 4, 2012 | 10:16
am

MOGADISHU, Somalia -- Uneasy neighbors Sudan and South Sudan reached a deal on oil transit fees Friday, a day after a U.N. Security Council deadline passed for them to reach an agreement or face sanctions, it was announced Saturday.

South Sudan recently marked a year of independence from Sudan, but things had gone so badly in recent months that there seemed little cause to celebrate. The countries tilted dangerously toward war earlier this year after South Sudan shut down oil production in January over the countries’ acrimonious dispute on oil transit fees.

The shutdown severely damaged both sides. As oil dried up, the economies of the countries faltered; consumer prices rocketed, shortages set in and their currencies fell.

While the two sides have now agreed on a transit price, an intractable dispute over territory and their shared border was set aside until late September.

African Union mediator Thabo Mbeki told reporters that the countries would discuss the steps to be taken so that oil companies could resume production.

Sudanese officials confirmed the deal but said it would not take effect until border security matters were settled. Sudan accuses South Sudan of supporting anti-government rebels in Sudanese territory, while South Sudan says Sudan is guilty of supporting militias in its country.

Landlocked South Sudan confirmed in a statement that it had agree to pay $9.48 a barrel to move its oil through Sudanese pipelines until the end of 2015. The South Sudanese government is hoping that an alternative pipeline will be built through Kenya or another neighboring country by then, giving it the option of bypassing Sudan in the future.

The deal came after U.S. Secretary of State Hillary Rodham Clinton visited the South Sudanese capital, Juba, and urged the government to make peace with its neighbor.

The U.S. has been supportive of South Sudan, the world’s newest country, which took three-quarters of the Sudanese oil fields when it became independent last year. But with oil production suspended indefinitely on top of massive government corruption in South Sudan's government and South Sudan’s seizure of a Sudanese oil town, Heglig, which nearly led to war in April, Washington has shown signs of impatience.

"We need to get those [oil] resources flowing again," Clinton told journalists in Juba on Friday after meeting South Sudanese President Salva Kiir. "A percentage of something is better than a percentage of nothing.

"While South Sudan and Sudan have become separate states, their fortunes and their futures remain inextricably linked," Clinton, who is on a seven-nation tour of Africa, said Friday.

On Saturday, she also met with Kenyan President Mwai Kibaki, urging his country to avoid a repeat of the violence that followed the 2007 Kenyan presidential elections.

Clinton also met the leader of Somalia’s transitional government, Sheik Sharif Sheik Ahmed, in Nairobi, the Kenyan capital, on Saturday and applauded strides made toward a transition expected Aug. 20, when a new president is to be elected by parliament.

"We are very encouraged by the progress the leaders have been making to meet all the requirements of the road map by the Aug. 20 deadline," Clinton told reporters.

In more than two decades since Somalia collapsed into civil war in 1991, there have been repeated failed efforts to create a permanent government as piracy flourished and Islamic militants called the Shabab seized control.

The Shabab abandoned the capital, Mogadishu, just under a year ago, and has lost more territory since.